A California trial court has ruled in favor of Allstate Insurance Company and the State of California, awarding $2.3 million in damages in a case that alleged kickbacks and the illegal ownership and fraudulent operation of two medical clinics in Los Angeles.
In its lawsuit, Allstate alleged that chiropractor Byum Suk Kim had violated the state's Insurance Frauds Prevention Act when he submitted to Allstate more than 90 claims for treatment of patients at the two medical clinics in Los Angeles that were illegally owned in violation of California's Moscone Knox Professional Corporation Act.
In its complaint, Allstate alleged that the two clinics, Wilshire Spinal Disc Clinic, Inc., and Allied Medical, Inc., were held out to the public as legitimate medical clinics incorporated in the State of California but actually were owned and operated by Dr. Kim in violation of the Moscone Act and California Business & Professions Code Sections 2052 and 2400, commonly referred to as the “corporate practice of medicine bar.”
Both clinics are no longer operating.
Judge Terry A. Green agreed with Allstate and ordered Dr. Kim to pay $1.8 million in penalties, plus over $582,000 in assessments and fees – a $2.3 million judgment.
“Submitting even one false insurance claim is more than just a bad idea; it's fraud, and insurance fraud is a crime,” said Allstate's California Field Senior Vice President Phil Telgenhoff. “Fraud drives up the cost we all pay for insurance by stealing millions of dollars from insurers. This cannot and will not be tolerated in California or anywhere. Allstate will fight fraud to help protect our customers and keep insurance costs down.”
Allstate's suit identified Dr. Kim as a chiropractor owning and operating the two medical clinics. The judgment was based on evidence submitted by Allstate showing that Dr. Kim had engaged in clinical and billing fraud in connection with claims that were submitted to Allstate, which included hundreds of individual violations of California Penal Code Section 550.
Specifically, the evidence showed that Dr. Kim was responsible for the preparation of 91 separate reports for patients allegedly treated by him at Wilshire and Allied, each of which contained misrepresentations in violation of Section 550 regarding the level and type of treatment purportedly provided.
Additionally, the billing records for the treatment allegedly provided were likewise fraudulent, as the evidence presented by Allstate showed there was illegal “up-coding” for services.
The judgment was based on Allstate proving the medical records, narrative reports, and bills of patients purportedly treated by Dr. Kim amounted to billing and clinical frauds perpetrated and carried out by Dr. Kim on a systematic basis at both Wilshire and Allied.
This is the second multimillion-dollar ruling against insurance fraud that Allstate has successfully argued in Los Angeles County Superior Court in 2016.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].